What is the true significance of departures by accountable care organizations (ACOs) from the Medicare Shared Savings Program (MSSP), the largest federal ACO program, which has been managed by the Centers for Medicare & Medicaid Services (CMS), since the ACO provisions of the Affordable Care Act (ACA) were implemented nine years ago? And what factors are making it difficult for ACOs to stay in the program? A team of healthcare policy researchers has looked into that important question, and has shared the results of their study in the May issue of Health Affairs.
In an article entitled, “Why Do Accountable Care Organizations Leave The Medicare Shared Savings Program?” William K. Bleser, Robert S. Saunders, David B. Muhlestein, and Mark McClellan provide significant insights into the problem of departures, a significant one in the MSSP Program as well as in other CMS-managed ACO programs. “The Medicare Shared Savings Program is the largest of all ACO programs, widespread, and growing,” they note. “About 30 percent of ACOs in the program decided to exit at some point in its first five years. There is little to no evidence on how key ACO performance, traits, competencies, and contexts affect program survival,” they write.
As a result, they state, “We investigated this research gap by linking four data sources and using improved survival methodology that could handle time-varying data. Our findings, while associative and lacking the ability to definitively assert causality, account for the most comprehensive set to date of empirically motivated factors and have major implications for CMS (especially with regard to the MSSP final rule), private payers that operate ACO programs, ACOs, and policy makers.”
In terms of what’s happening, the researches note that “Of the 624 ACOs existing at any time in the first five years of the Medicare Shared Savings Program performance files, 187 (30 percent) exited the program at some point (59 percent of them exited midcontract, and 41 percent did so at the end of a contract). The rate of program exit by year was 2.7 percent in 2013, 9.0 percent in 2014, 15.3 percent in 2015, 13.0 percent in 2016, and 7.4 percent in 2017. Examined a different way, the rate of program exit was 4.0 percent for ACOs in their first year and 9.5 percent for second-year, 20.7 percent for third-year, 10.6 percent for fourth-year, and 11.2 percent for fifth-year ACOs… Note,” they write, “that risk of program exit by calendar year and years of experience peaked in year three and then generally decreased.”
With regard to what they looked at, the researchers noted that “Six factors were significantly associated with risk of MSSP program exit. Four factors reduced the risk: ever achieving shared-savings bonus payments (hazard ratio: 0.22), having a higher benchmark per capita (per $1,000 increase, HR: 0.80), being in a market with higher Medicare cost growth (per 1 percent increase, HR: 0.66), and offering more of the fourteen possible care coordination services (for each additional service offered, HR: 0.73) (exhibit 1). Two factors increased the risk: bearing downside risk (HR: 2.18) and having higher Hierarchical Condition Categories risk scores, which indicate sicker patients (per 10 percent increase, HR: 1.55).”
What can be done? “First, in terms of MSSP performance and financial variables, the program could benefit from adjustments to its key components. One issue about which there is much debate is the timing of moving MSSP ACOs into downside risk,” the authors write. Currently, CMS’s policy is to allow an ACO to have two ‘agreement periods’ (for a total of six years) in track 1 (upside risk only) before moving into tracks 2 or 3 (upside and downside risk). The first cohort of ACOs—which entered the program on or before January 1, 2013—reached the end of their second agreement period at the end of 2018, and ACO stakeholders recently argued to CMS that this was not enough time to prepare for downside risk, asking for a third track 1 agreement period.16 No MSSP ACOs were required to take on downside risk in the time period for which data were available (through 2017). Accordingly, while the number of ACOs that voluntarily entered downside-risk contracts is low, it is increasing (from 0.8 percent of ACOs in performance year 2013 to 8 percent in 2017).”
Significantly, the authors note, “ On the one hand, evidence suggests that the longer an ACO participates, the more willing it is to adopt two-sided risk”—but “the new MSSP rule—which would allow an ACO only one to three years (less than two years in most cases) before moving to downside risk, substantially less than the current six years—could cause successful ACOs to drop out of the program.” In addition, the authors believe that ACOs that have made “big improvements and dropped their benchmarks (that is, ACOs with little ‘fat to trim’ in both cases) may be disadvantaged.” Importantly, every $1,000 decrease in per capita benchmark, they find, was associated with a 25-percent increased risk of program exit. In addition, they found that ACOs with sicker patients had a higher likelihood of program exit. What’s more, quality performance appears to be unconnected to financial performance.
Conversely, the researchers write, “The most important programmatic factor for ACO survival appears to be an ACO’s ability to realize bonus payments. Even achieving a bonus just once cut the risk of program exit by more than three-quarters, which indicates that CMS benchmarks and shared-savings bonus payment calculations are extremely important for an organization’s business decision to participate or continue participating in ACO models (and this association is likely stronger in reality, because of shared savings’ underestimating true savings).” And, in that context, they write, “[T]he findings from this study also suggest that the greatly shortened upside-only risk period may cause successful ACOs to leave the program. At least three years may be necessary to prepare for downside risk, though more research is needed.”
